What is the general attitude of business and the authorities to competition compliance?
Competition compliance is an increasingly important issue for businesses and authorities in Spain.
Businesses are increasingly investing in competition compliance programmes and training for personnel, in particular since changes in other areas of enforcement (especially white collar crime), which have encouraged compliance efforts across the board.
For their part, both the regional and (in particular) national competition authorities have made significant efforts to publicise the need for competition compliance. In this context, they have active advocacy units that produce publications, seminars and other activities. More importantly, they continue to promote compliance through vigorous enforcement of EU and Spanish competition law in all sectors of the economy – in particular, as a result of the leniency programme.
Competition compliance has grown in importance following a number of cases in which the competition authorities have imposed fines on individual directors found to have participated in antitrust infringements. Its importance is expected to grow further as a result of the competition authorities’ efforts to ensure that companies found guilty of serious competition infringements are banned from contracting with the government (whether local or national). The potential consequences of such contracting bans have increased the interest of business in competition compliance in general, and the possibility of avoiding infringements by introducing so-called ‘self-cleaning’ measures are expected to make effective compliance programmes a key consideration for businesses.Government compliance programmes
Is there a government-approved standard for compliance programmes in your jurisdiction?
There is currently no government-approved standard for competition compliance programmes in Spain. However, given their importance as possible ‘self-cleaning’ measures in the event of a ban on public contracts, the competition authorities have announced their intention to introduce guidelines on compliance programmes that build on best practices from other EU jurisdictions.
At the regional level, the competition authority for the Basque region recently published for consultation the Competition Compliance Guide. Although the guide does not set out any minimum standards, it makes adequate recommendations and will no doubt be taken into account by authorities when analysing the sufficiency of measures taken by companies.Applicability of compliance programmes
Is the compliance guidance generally applicable or do best practice and obligations depend on company size and the sector of the economy in which it operates?
No formal guidance is available yet at the national level. Nevertheless, both the national and regional competition authorities enforce competition rules vigorously even in small markets and against small businesses, which should plan accordingly.
For its part, the guide recently published by the Basque competition authority clearly indicates that the size of the company and the economic sector in which it operates should play a role in the design and evaluation of a compliance programme; however, it does not suggest that only large companies should make compliance efforts.
If the company has a competition compliance programme in place, does it have any effect on sanctions?
A competition compliance programme is not formally recognised as a mitigating or aggravating circumstance under Spanish competition law, and the mere existence of a competition compliance programme does not automatically ensure the reduction of a fine, particularly if the infringement evidences the programme’s failure.
However, recent competition authority practice shows that such programmes can be taken into account when calculating fines and may lead to a reduction of the amount imposed in some cases. In particular, the competition authorities have found that the introduction of a competition compliance programme after an investigation had started showed a company's commitment to compliance with competition law (Case SNC/0036/15), and in one case (Case S/DC/0544/14) the authority reduced the fine imposed on one of the companies in recognition of its compliance efforts.
Implementing a competition compliance programmeCommitment to competition compliance
How does a company demonstrate its commitment to competition compliance?
Where the competition authorities have considered a company´s commitment to competition compliance, they have emphasised that a competition compliance programme must be reinforced with measures aimed at increasing awareness and effectiveness of that programme. In line with the Competition Compliance Guide recently published by the Basque competition authority, these measures typically include:
- appointing a compliance officer;
- introducing regular training and audits; and
- imposing disciplinary penalties for non-compliance.
What are the key features of a compliance programme regarding risk identification?
Although no formal guidance is available, in keeping with the decisional practice of the competition authorities, an effective compliance programme should include as key elements:
- training sessions to increase awareness among key employees which are tailored to the specific needs of the company;
- a clear mechanism for employees to report competition law infringements safely and anonymously; and
- regular audits to identify the areas where the company is most exposed to competition law infringements.
What are the key features of a compliance programme regarding risk-assessment?
No guidance is currently available for risk assessment. However, the competition authorities will take into account the extent to which a compliance programme is properly tailored to identify the most important areas of risks, whether via regular audits or other mechanisms.Risk-mitigation
What are the key features of a compliance programme regarding risk-mitigation?
The key features of a compliance programme from the point of view of risk mitigation are adequate training for staff supported by clear disciplinary measures to ensure deterrence.Compliance programme review
What are the key features of a compliance programme regarding review?
An effective compliance programme should provide for periodic evaluations and reviews of its implementation and application, as well as regular updates, to ensure that it is in line with developments in the legal landscape and the sector in which the company operates.
Dealing with competitorsArrangements to avoid
What types of arrangements should the company avoid entering into with its competitors?
Spanish competition law prohibits all types of agreement, whether express or tacit, that aim to prevent, restrict or distort competition. The prohibition has been interpreted broadly to include any kind of concerted practice or information exchange, including unidirectional information exchanges.
Accordingly, businesses should avoid entering into any exchange of information with competitors where that information is relevant to competitive parameters such as price, production, costs or customers. In particular, business should avoid any contact with competitors that could be interpreted as an agreement or discussion of practices, including:
- price fixing;
- limiting or controlling production;
- technical developments or investment;
- sharing markets or sources of supply;
- applying dissimilar conditions to equivalent transactions; and
- entering agreements subject to the acceptance of supplementary obligations that have no connection with the object of these agreements.
What precautions can be taken to manage competition law risk when the company enters into an arrangement with a competitor?
As a general rule, legal advice should always be sought before entering into an arrangement with a competitor. Further, employees should be aware of the risks and precautions necessary when interacting with competitors. In particular, employees who attend trade association meetings on a regular basis should ensure that an agenda is agreed in advance to allow legal advice to be sought if necessary.
What form must behaviour take to constitute a cartel?
A cartel is defined by the Competition Act as including any agreement or concerted practice. Since no form is specified, it is understood that no written agreement of other formality is required, and one of the notable features of Spanish cartel enforcement has been the extension of the concept of cartel to exchanges of information. (The leniency programme formally applies only to ‘secret’ agreements, although this concept is also interpreted broadly.)
In particular, the prohibited behaviour clearly includes attempts. The competition authorities need not demonstrate that an agreement or concerted practice was successful in its aims, and in one case the competition authority imposed fines on companies that engaged in an information exchange in the context of a failed attempt to reach an agreement.Avoiding sanctions
Under what circumstances can cartels be exempted from sanctions?
There is no prior notification mechanism or block exemption under which cartels can be exempted from penalties. However, individual companies that have participated in a cartel can avoid fines by applying for immunity under the leniency programme described below.Exchanging information
Can the company exchange information with its competitors?
The competition authorities have adopted a very strict position in relation to information exchanges between competitors, treating them as serious infringements and even as cartels in a number of cases.
For these purposes, exchanges of information in relation to prices, costs, margins or customers that are disaggregated, current or future and non-public are considered commercially sensitive, even where the data concerned is basic or limited.
LeniencyCartel leniency programmes
Is a leniency programme available to companies or individuals who participate in a cartel in your jurisdiction?
A leniency programme is available to any company or person that participates or has participated in a cartel in Spain.
The programme extends only to conduct that qualifies as a cartel and not to any other type of prohibited behaviour. However, cartel conduct can be broadly defined as including any agreement of concerted practice and even exchanges of information.
Full immunity is available for applicants that are the first to provide the competition authorities with evidence that may enable these authorities to prove the existence of a cartel or provide sufficient legal grounds for an inspection. Applicants who are not the first to provide evidence of a cartel may benefit from a reduction of their fine where the evidence provides significant added value to the evidence already in the possession of the authorities.
To qualify for leniency an applicant must:
- cooperate fully, continuously and diligently with the authorities throughout the administrative investigation procedure;
- end its involvement in the infringement (unless the authorities considers otherwise);
- not destroy evidence or disclose its intention to present a leniency application; and
- not have been the instigator of the cartel.
Can the company apply for leniency for itself and its individual officers and employees?
Companies can apply for leniency themselves and for individual officers and employees. Employees must be identified in the formal leniency application and cooperate fully with the authorities during the proceedings.
Can the company reserve a place in line before a formal leniency application is ready?
An application for leniency must include all of the information available and at least sufficient information to correctly identify the cartel and its participants. Subject to that, the authority will grant, upon a reasoned request by the applicant, a deadline for submitting additional evidence if the applicant does not have all of the necessary information at the time of the application. Provided the evidence is submitted within the deadline, the date of submission of the application for exemption is deemed to be the date of the initial request.Whistleblowing
If the company blows the whistle on other cartels, can it get any benefit?
The Spanish leniency programme does not allow for so-called ‘leniency plus’ benefits for revealing additional cartels. However, the company may of course benefit from leniency for those additional infringements.
Dealing with commercial partners (suppliers and customers)Vertical agreements
What types of vertical arrangements between the company and its suppliers or customers are subject to competition enforcement?
Any agreement (vertical or not) that aims to hinder, restrict or distort competition can fall within the scope of the Spanish competition rules and will be subject to competition enforcement. These rules apply to all types of vertical agreement, including distribution, franchising, and supply agreements of all kinds. In line with other jurisdictions, vertical restraints such as resale price maintenance, restrictions on passive sales, single branding and tying agreements may attract particular scrutiny.
The approach of Spanish competition law to agency agreements is also in line with that of other jurisdictions, particularly those in the European Union. The Spanish competition authorities tend to follow EU guidance on the definition of ‘true agency’ (in general, by reference to the assumption of commercial risk) and agreements between principals and agents cannot be considered to constitute resale price maintenance or resale restrictions. Nevertheless, single branding, selection and exclusivity issues relating to the agent itself will still be subject to competition enforcement.
Would the regulatory authority consider the above vertical arrangements per se illegal? If not, how do they analyse and decide on these arrangements?
In line with EU competition law, vertical restraints can be considered restrictions by object or effect and the Spanish authorities generally apply the same principles as under EU law.
Certain vertical restraints are considered particularly serious and are excluded from the application of the de minimis exception and the EU Block Exemption Regulation due to their characteristics. These so-called ‘hardcore’ restrictions almost always infringe competition law and will almost never qualify for exemption. Examples of these restrictions are resale price maintenance and absolute territorial protection and other restrictions on passive sales.
Under what circumstances can vertical arrangements be exempted from sanctions?
Spanish competition law provides that conduct exempted under the EU Block Exemption Regulation is also exempted in Spain, even if the conduct does not affect trade between EU member states. Further, the Spanish competition authorities typically follow the European Commission’s approach of applying the application of the competition rules to vertical restrains. Accordingly, most vertical agreements between non-competitors will be exempted provided that the market share of the parties is below 30% in the relevant markets and the agreement includes no hardcore restrictions.
Even where the EU Block Exemption Regulation does not apply, vertical agreements can benefit from an individual exemption under Spanish law when the so-called ‘criteria for exemption are met. In particular, a vertical agreement can benefit from an individual exemption under Spanish competition law if it generates efficiencies and allows consumers a fair share of the resulting benefit. In addition, the restrictions must be indispensable to achieve the efficiencies generated and competition cannot be eliminated in a substantial part of the market.
Further, arrangements that do not include hardcore restrictions or non-competes of more than five years duration can benefit from the de minimis exemption depending on the market shares of the parties. Specifically, an agreement between competitors can be excepted provided that their market share does not exceed 10%, while agreements between non-competitors can be excepted provided that their market shares do not exceed 15%. In addition, the Spanish competition authorities can declare that a practice falls under the de minimis exemption based on the economic and legal context.
Further, the Competition Act exempts practices that the parties are legally required or forced to adopt, although in practice this exception is strictly interpreted.
How to behave as a market dominant playerDetermining dominant market player
Which factors does your jurisdiction apply to determine if the company holds a dominant market position?
Spanish competition law defines dominance in a similar way to EU competition law. Specifically, a ‘dominant position’ is defined as a situation of economic power enabling a firm to determine its conduct independently of its customers and competitors.
When analysing whether a company holds a dominant position in the market, the competition authorities follow an approach similar to that of the European Commission, taking into account:
- market share and its stability and volatility over time;
- barriers to entry;
- the economic capacity of competitors;
- competitive advantages;
- the degree of vertical integration and dominance in related markets; and
- the countervailing power of the demand side.
If the company holds a dominant market position, what forms of behaviour constitute abuse of market dominance? Describe any recent cases.
Spanish competition law provides an open list of conduct that may constitute an abuse of dominant position, including:
- the imposition of unfair prices or commercial terms;
- the limitation of production, distribution or technical development;
- an unjustified refusal to supply;
- the application of unequal conditions to equivalent services placing competitors at a disadvantage to others; and
However, this is not a set list and, in keeping with EU law and jurisprudence, any conduct by a dominant undertaking that hinders, restricts or distorts competition may potentially be considered an abuse.
Most recent abuse cases decided in Spain have involved conduct designed to stifle competition in network industries such as passenger rail transport, pricing power in the electricity sector and unjustified commercial terms and restrictions imposed on customers by collecting societies. Most recently, the National Commission of Markets and Competition has carried out dawn raids in the pharmaceutical sector in relation to possible abuses of dominance.
Under what circumstances can abusing market dominance be exempted from sanctions or excluded from enforcement?
There are no exemptions for abuse of dominance and the leniency programme is not available. Theoretically, an abuse of dominance could be declared de minimis, although logically this is extremely unlikely. As such, the only basis for an exception would be that the allegedly abusive conduct was required in order to comply with the law.
Competition compliance in mergers and acquisitionsCompetition authority approval
Does the company need to obtain approval from the competition authority for mergers and acquisitions? Is it mandatory or voluntary to obtain approval before completion?
Mergers, acquisitions of sole or joint control and the creation of ‘full function’ joint ventures that meet certain thresholds must be notified to and authorised by the competition authorities before completion. The competition authorities may lift the suspension of the implementation before approval in the event of takeover bids on the Spanish stock exchange and other situations of urgency, but will only do so in exceptional cases and generally only at the end of the first phase.
Transactions must be notified if either of two alternative thresholds are met:
- if the transaction leads to at least a 30% share acquisition or increase of a relevant market in Spain or in a geographic market within Spain (unless the target’s turnover in Spain in the last financial year is less than €10 million and the participants do not have a combined or individual market share equal to or greater than 50% in any affected market in Spain or in a geographic market within Spain); or
- if the combined aggregate turnover in Spain of all the participants in the last financial year was more than €240 million and the turnover in Spain in the last financial year of each of at least two of the participants was more than €60 million.
A binding agreement is generally needed in order to notify, but there is no triggering event or deadline for filing; it is sufficient that the transaction is notified and authorised prior to closing.
The responsibility for the filing is on the merging parties or the party or parties that will control the resuIting entity. In an acquisition of sole control, the acquirer is responsible for filing. In an acquisition of joint control or the creation of a joint venture, all parties that will have joint control must sign the notification.
How long does it normally take to obtain approval?
In cases where no competition issues arise (ie, most cases) clearance is obtained within one month of notification. However, such notification is often preceded by prenotification contacts with the competition authorities. The investigation may be extended on a number of grounds, including if additional information is required. Accordingly, it is prudent to allow two to three months for clearance if possible.
Spanish merger control rules allow for a simplified procedure, under which a short-form notification is used and a short-form decision will be issued. The timetable for that procedure is formally the same (ie, one month from notification) and prenotification contacts are still required; however, once notified, clearance is typically obtained more quickly than in standard cases.
On the other hand, where competition issues arise, an investigation can be significantly longer. There are formal deadlines of one month in the first phase and two months in the second phase, but these can be and often are extended significantly; later government intervention is also possible. Accordingly, the most difficult cases can and do last six months or more.
If the company obtains approval, does it mean the authority has confirmed the terms in the documents will be considered compliant with competition law?
Where a transaction is authorised, the terms of the documents notified to the competition authorities and considered directly related to and necessary for the transaction are included in the authorisation. However, the authorities requires the parties to identify any competition restrictions included in the agreement in the notification form and will review them carefully and exclude from authorisation any restrictions that they consider to go beyond what may be ancillary for these purposes. Such excluded restrictions must then be assessed under the general competition rules.Failure to file
What are the consequences for failure to file, delay in filing and incomplete filing? Have there been any recent cases?
There is no statutory deadline for filing or fines for failure to file within a given period. However, if a notifiable transaction is carried out without authorisation, the competition authorities may require the parties to notify the transaction within 20 days, review that transaction and potentially prohibit or impose remedies and impose fines of up to 5% of the total turnover of the infringing party in the previous year for the failure to respect the standstill obligation.
The competition authorities have been highly active in enforcing the obligation to notify, particularly in cases based on the market share threshold. They actively monitor transactions carried out in Spain, regularly send information requests to parties involved in transactions and have taken action in a number of cases of non-notification, imposing fines between €5,000 and €286,000 in more than 10 cases over the last eight years (although several of those fines were later annulled or reduced).
Investigation and settlementLegal representation
Under which circumstances would the company and officers or employees need separate legal representation? Do the authorities require separate legal representation during certain types of investigations?
Between 2016 and 2019, the competition authorities have fined 33 officers and employees a total of €666,000 in six cases. Absent a conflict of interest, there is no formal requirement under Spanish competition law for a company and its officers or employees to have separate legal representation. The competition authorities do not have the power to require separate legal representation.Dawn raids
For what types of infringement would the regulatory authority launch a dawn raid? Are there any specific procedural rules for dawn raids?
The competition authorities can and do carry out dawn raid inspections for antitrust infringements (a power they use frequently). Between 2013 and 2017, the national competition authority carried out 54 dawn raids on 186 companies, while the regional authorities assist the national authority and carry out their own inspections.
When carrying out inspections, the authorities have broad powers of investigation that include the right to:
- access premises, land and the means of transport of companies and associations, as well as private homes (in the latter case, with a court order);
- seize and make copies of documents to support an investigation (hard copies or electronic copies);
- retain original documents that have been seized;
- affix seals to premises under inspection; and
- request oral explanations on the spot.
By contrast, there are few specific rules as to how the authorities may carry out their investigation of physical or electronic copies of relevant documents; however, the competition authorities have sought to remedy this by releasing notices setting out an applicable framework.
What are the company’s rights and obligations during a dawn raid?
During an inspection, a company has the right to receive a copy of the competition authority’s investigation order, which should identify:
- the date, scope, object and purpose of the inspection;
- the inspectors taking part;
- the subjects under investigation; and
- the data, documents, operations, information and other elements to be inspected.
If the investigation order is insufficient, the company can refuse to comply. During an inspection, the company has the right to be advised by external and internal counsel and to receive a copy of the official record and a list of documents taken or copied by the authority.
The competition authorities can carry out inspections either with a company’s consent or with judicial authorisation. Further, in determining whether to allow the inspection, a company has the right to be informed whether a judicial authorisation has been applied for and refused.
Companies have a general obligation to cooperate with inspectors, and in particular not to destroy or tamper with evidence, provide access to documents within the scope of the inspection and respect any seals affixed by the authority. If they fail to do so, they can be fined significant penalties of up to 1% of their turnover. Since 2008, the competition authorities have imposed fines of between €2,000 and €418,600 on six companies.Settlement mechanisms
Is there any mechanism to settle, or to make commitments to regulators, during an investigation?
The competition authorities may accept the early termination of an investigation when the companies under investigation submit commitments to address competition concerns.
As a rule, the competition authorities will not accept commitments:
- in cases involving cartels;
- for conduct that had irreversible effects on competition;
- where the infringing companies have already been penalised for similar conduct; or
- when the early termination jeopardises the effectiveness and deterrent effect of competition rules.
In other cases, the parties may submit commitments at almost any time during the investigation procedure (although in practice they are unlikely to be accepted after the statement of objections). The authority has broad discretion as to whether to open negotiations and whether to accept any commitments offered. If the authority accepts the commitments submitted by the parties, the decision adopted will not include a formal declaration of an infringement or an imposition of a penalty. The procedure is more fully described in a notice published by the authority.
What weight will the authorities place on companies implementing or amending a compliance programme in settlement negotiations?
In general, although the inclusion of compliance measures would likely be looked on positively, the competition authorities tend to prefer commitments that are clear and easily verifiable.Corporate monitorships
Are corporate monitorships used in your jurisdiction?
Corporate monitorships are not generally used in Spain; however, as part of their discretion, the competition authorities could require parties to submit to monitorships as part of a commitments package in a settlement case.Statements of facts
Are agreed statements of facts in a settlement with the authorities automatically admissible as evidence in actions for private damages, including class-actions or representative claims?
Competition authority settlement decisions do not generally set out an agreed statement of facts. Nevertheless, the findings in those decisions are admissible in legal proceedings.Invoking legal privilege
Can the company or an individual invoke legal privilege or privilege against self-incrimination in an investigation?
Under Spanish law, companies can rely on legal privilege to deny the competition authorities access to documents that are confidential and have been issued by an external legal counsel from an EEA member state. They cannot be compelled to provide self-incriminatory evidence. However, all undertakings are required to cooperate with the competition authorities during their investigation and administrative fines can therefore be imposed for failure to do so even if this would be self-incriminating.Confidentiality protection
What confidentiality protection is afforded to the company and/or individual involved in competition investigations?
Under Spanish competition law, all parties involved in antitrust investigations by competition authorities have a duty of secrecy and may not reveal any facts or information to which they have had access by virtue of participating in that investigation.
However, the identities of companies under investigation are public, as are the identities of individuals that are fined by the authorities. Further, while Spanish competition law allows for the confidential treatment of business secrets during an investigation and in the publication of a decision, this cannot be granted on public interest grounds where the information concerned is necessary for the authorities to prove their case.Refusal to cooperate
What are the penalties for refusing to cooperate with the authorities in an investigation?
Refusal to cooperate in an investigation, obstructing a dawn raid inspection or providing incomplete, false, misleading or incorrect information are considered minor infringements subject to penalties of up to 1% of a company’s total turnover. In addition, the competition authorities may impose penalties of up to €12,000 per day during which a company fails to comply with a request.Infringement notification
Is there a duty to notify the regulator of competition infringements?
What are the limitation periods for competition infringements?
Limitation periods for competition infringements vary according to the gravity of the offence:
- For serious infringements (including the most serious abuses of dominant positions and cartels and other agreements between competitors), the period is four years.
- For less serious infringements (including other abuses, agreements between non-competitors and failing to respect the standstill obligation), the period is two years.
- For minor infringements (such as failure to comply with authority requests and obstruction of inspections), the period is one year.
These periods may be interrupted by any act of the authorities that is formally known to the party concerned and by acts carried out by the parties concerned in order to ensure, comply or execute the corresponding decisions.
Similarly, once the competition authorities impose a fine, they have one, two or four years in which to execute it, depending on the seriousness of the infringement.
Are there any other regulated anticompetitive practices not mentioned above? Provide details.
In addition to restrictive agreements and abuses of dominance, Spanish competition law prohibits acts of unfair competition that are sufficiently serious as to affect the public interest in a manner capable of restricting competition. Although not frequently applied in recent years, the provision has been used to impose significant fines on utility companies for misleading consumers to prevent them switching suppliers.Future reform
Are there any proposals for competition law reform in your jurisdiction? If yes, what effects will it have on the company’s compliance?
There are a number of proposals for reform relating in particular, but not limited to, the transposition of the EU Empowering National Competition Authorities Directive (2019/1/EU) (ECN+ Directive).
The ECN+ Directive seeks to strengthen the cooperation between national competition authorities and the European Commission within the framework of the European Competition Network (ECN). After transposition, the Spanish competition authorities are expected to have the power to:
- impose interim measures;
- accept and make binding any commitments offered by undertakings; and
- reopen investigations where commitments were accepted based on, among other issues, incomplete or misleading information.
The deadline for transposing the ECN+ Directive into the Spanish legal system is 4 February 2021.
In addition, there is an ongoing debate about the institutional framework of the Spanish competition authorities. The 2017 proposal to split the current framework into two independent institutions (ie, one in charge of supervision and control of the regulated economic sectors and the other in charge of competition enforcement) is currently on hold, but may gain importance depending on the political landscape.
The Spanish competition authorities have also invited stakeholders to take part in discussions to identify other areas of improvement; however, no formal proposals have been published.
Updates and trendsRecent developments
Are there any emerging trends or hot topics regarding competition compliance in your jurisdiction?
In recent years, the fight against bid rigging has been high on the competition authorities’ agenda. In addition to the investigations opened and fines imposed in this area, other measures have been adopted. For example, a screening system that helps to identify fraudulent tender offers has been introduced to increase the number of ex officio investigations. Collaboration with the public administrations has been intensified and, in January 2017, the competition authorities published a guide aimed at assisting in the detection of fraud in public tenders. Further, in 2019 the competition authorities sought, for the first time, to have companies involved in bid rigging banned from future public contracts.
Law stated dateCorrect on
Give the date on which the above content is accurate.
27 September 2019.